A common assumption in the first literature of social network formation is homogeneity, in the sense that, on one hand, all decision makers conjecture that others receive information and establish links of equivalent value, on the other, links can fail independently of each other with the same probability. However, since empirical literature shows that ex-ante asymmetries across players arise quite naturally in reality, recent theoretical literature focuses on the role of heterogeneity. In this work, a general kind of heterogeneity is considered in the framework of one sided two-way flow networks for situations in which agents do not have an a-priori opinion on the relative importance of benefits that each player conjectures to get from connections with the others. Two different models of network formation are here presented, corresponding to “relative" or “absolute" disutility of establishing direct connections (rd-networks and ad-networks), which are games with vector valued payoffs. It turns out that, for a certain class of parameters (low disutility), in the rd-networks the “two-way connectedness" and “no cycles” properties characterize Pareto Nash equilibria while the center sponsored star is characterized by a refinement of Pareto Nash equilibrium called “ideal equilibrium”. In the ad-networks, results are substantially different, in fact, on one hand Pareto Nash characterize only the “no cycles” property while simple examples show that a Pareto Nash can be disconnected. On the other hand, “two-way connectedness” is characterized by a generalization to multicriteria games of the “friendliness equilibrium” concept, meaning that altruistic motives increase the level of connectedness of the entire network.

Unknown Heterogeneity in Noncooperative Social Network Formation

DE MARCO, Giuseppe
2009

Abstract

A common assumption in the first literature of social network formation is homogeneity, in the sense that, on one hand, all decision makers conjecture that others receive information and establish links of equivalent value, on the other, links can fail independently of each other with the same probability. However, since empirical literature shows that ex-ante asymmetries across players arise quite naturally in reality, recent theoretical literature focuses on the role of heterogeneity. In this work, a general kind of heterogeneity is considered in the framework of one sided two-way flow networks for situations in which agents do not have an a-priori opinion on the relative importance of benefits that each player conjectures to get from connections with the others. Two different models of network formation are here presented, corresponding to “relative" or “absolute" disutility of establishing direct connections (rd-networks and ad-networks), which are games with vector valued payoffs. It turns out that, for a certain class of parameters (low disutility), in the rd-networks the “two-way connectedness" and “no cycles” properties characterize Pareto Nash equilibria while the center sponsored star is characterized by a refinement of Pareto Nash equilibrium called “ideal equilibrium”. In the ad-networks, results are substantially different, in fact, on one hand Pareto Nash characterize only the “no cycles” property while simple examples show that a Pareto Nash can be disconnected. On the other hand, “two-way connectedness” is characterized by a generalization to multicriteria games of the “friendliness equilibrium” concept, meaning that altruistic motives increase the level of connectedness of the entire network.
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Utilizza questo identificativo per citare o creare un link a questo documento: http://hdl.handle.net/11367/24174
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